Walker & Dunlop (NYSE: WD) and Medallion Financial (NASDAQ:MFIN) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.
Profitability
Get Walker & Dunlop alerts:This table compares Walker & Dunlop and Medallion Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Walker & Dunlop | 29.20% | 19.19% | 5.08% |
| Medallion Financial | -80.33% | -3.52% | -1.54% |
Dividends
Walker & Dunlop pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Medallion Financial does not pay a dividend. Walker & Dunlop pays out 21.0% of its earnings in the form of a dividend.
Analyst Recommendations
This is a summary of recent ratings and target prices for Walker & Dunlop and Medallion Financial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Walker & Dunlop | 0 | 1 | 3 | 0 | 2.75 |
| Medallion Financial | 0 | 1 | 1 | 0 | 2.50 |
Walker & Dunlop presently has a consensus price target of $61.50, indicating a potential upside of 8.58%. Medallion Financial has a consensus price target of $7.50, indicating a potential upside of 41.78%. Given Medallion Financial’s higher possible upside, analysts clearly believe Medallion Financial is more favorable than Walker & Dunlop.
Earnings and Valuation
This table compares Walker & Dunlop and Medallion Financial’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Walker & Dunlop | $711.86 million | 2.47 | $211.12 million | $4.76 | 11.90 |
| Medallion Financial | $19.71 million | 6.56 | -$7.12 million | $0.31 | 17.06 |
Walker & Dunlop has higher revenue and earnings than Medallion Financial. Walker & Dunlop is trading at a lower price-to-earnings ratio than Medallion Financial, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
80.6% of Walker & Dunlop shares are owned by institutional investors. Comparatively, 17.3% of Medallion Financial shares are owned by institutional investors. 11.2% of Walker & Dunlop shares are owned by company insiders. Comparatively, 16.7% of Medallion Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Volatility and Risk
Walker & Dunlop has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 1.74, meaning that its stock price is 74% more volatile than the S&P 500.
Summary
Walker & Dunlop beats Medallion Financial on 10 of the 15 factors compared between the two stocks.
About Walker & Dunlop
Walker & Dunlop, Inc., through its subsidiaries, originates, sells, and services a range of multifamily and other commercial real estate loans for owners and developers of real estate in the United States. The company offers multifamily properties and commercial real estate finance products, such as first mortgage loans, second trust loans, supplemental financings, construction loans, mezzanine loans, and bridge/interim loans. It provides multifamily finance for multifamily, manufactured housing communities, student housing, affordable, and senior housing properties under the Fannie Mae DUS program; and FHA finance, such as construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing, and healthcare facilities. The company also acts as an intermediary in the placement of commercial real estate debt between institutional sources of capital, including life insurance companies, investment banks, commercial banks, pension funds, commercial mortgage backed securities (CMBS) issuers, and other institutional investors, as well as owners of various types of commercial real estate. In addition, it advises on capital structure; develops the financing package; facilitates negotiations between its client and institutional sources of capital; coordinates due diligence; and assists in closing the transaction, as well as offers interim loans and CMBS products, and investment sales brokerage services. Further, the company offers underwriting and risk management, servicing and asset management, and direct loan originators and correspondent network services. Walker & Dunlop, Inc. was founded in 1937 and is headquartered in Bethesda, Maryland.
About Medallion Financial
Medallion Financial Corp., through with its subsidiaries, operates as a specialty finance company in the United States. It originates, acquires, and services loans that finance taxicab medallions and various types of commercial businesses. The company offers consumer loans for the purchase of recreational vehicles, boats, motorcycles, and trailers, as well as to finance small scale home improvements; and commercial loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business. It also provides secured mezzanine loans to businesses in various industries, including manufacturing, and various service providers; and asset based loans. In addition, the company offers other secured commercial loans to various businesses comprising retail trade and various service providers; and other debt, mezzanine, and equity investment capital to companies in various industries. Further, it raises deposits and conducts other banking activities. Medallion Financial Corp. was founded in 1995 and is headquartered in New York City, New York.
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